Aside from the occasional crowd-pleasing Congressional hearings that follow anything that involved steroids, whether the subject of sometimes bizarre interrogation is a high-profile professional athlete or a horse trainer, racing at every level except the most local of government is an afterthought in the games played by our elected officials. This is illustrated starkly in the week's racing-related news, which appears to be a watershed of economic disaster.
No one is quite sure of the direction the financial markets will take, but a share in the nation's largest racetrack operator and latest to file for Chapter 11 protection is currently lingering at about eight cents. The future of racing in Kentucky yes, Kentucky is said to be imperiled, joining New York, the place where they keep Saratoga, on the endangered list. The year's first auctions remind that the recession has not spared the market for young racing prospects. The victims of Bernard Madoff's historic scam include members of the racing fraternity whose setbacks will have repercussions that reach beyond the nation's auction rings. The first evidence of Madoff's effect on racing: Jeffery Tucker's showplace upstate New York farm a property valued at more than $100 million not long ago can be acquired on the cheap, maybe $17 million according to the prevailing gossip.
The tight credit market has forced the corporation awarded the contract to operate video lottery terminals at the rusting Aqueduct racetrack to renege in deference to insufficient financing and the incumbent governor, not unjustly, is left holding the bag.
The overwhelming financial train wreck that is Magna Entertainment virtually assures that racing will soon be over at Golden Gate Fields, soon to be a site of commercial development, and that Pimlico, where the spring meeting was shortened by 11 days, will retain its tattered yellow fringe if it in fact remains a viable business enterprise.
All this in one way or another has roots in failure or abdication of responsibility at almost every stratum of government and various levels of regulatory authority. A low economic point for the nation in the wake of government failure to effectively regulate the banking and investment industries, the racing industry and its various factions have not avoided a derivative-powered vortex that has inhaled trillions of dollars in wealth both personal and corporate.
While much of the troubled economy is resultant from government and regulatory neglect, private avarice and what could be seen as institutional felony, racing, which would be better armed to at least assuage economic battery if given the necessary tools, is victim of what appears to be an official disinterest that has left it abandoned on the roadside of politics.
Frank Stronach's misguided Disney-meets-Bob Guccione vision of racing as it ought to be is at the core of much of Magna's imminent demise, but if not for the years-long delay in the approval of slot machine legislation and the subsequent denial of the Maryland Jockey Club's application for a casino at Laurel Park, the Maryland tracks might be healthy enough to attract another buyer and the future of the Preakness would not be in question. As it stands, Pimlico's spring meeting has been shortened by about a third and Magna's pending failure brings the prospect of radical change to the landscape of racing far beyond Maryland.
MI Developments, which is the controlling shareholder in Magna Enterprises, said in filings with the Securities and Exchange Commission this week that if it is successful in acquiring the properties it is seeking in a $195-million bid, the assets will be either sold, spun-off to its shareholders, or closed for other development.
Among the Magna's other properties: Santa Anita, Gulfstream Park, Lone Star Park, Golden Gate Fields, Remington Park, Thistledown, Palm Meadows, a training center in Florida, AmTote International, the tote company, and XpressBet.com. Stronach's stock holdings as chairman in both MID and Magna, Stronach's stock holdings would be "segregated" into one or more new wholly-owned subsidiaries generically called "Raceco." If profitable or self-sustaining by the end of 2011, Raceco will either sell or spin-off the assets to MID shareholders. If not profitable, the more likely scenario, the company intends to "cease racing and gaming operations and either sell or develop all of Raceco's remaining assets."
Poof!
Kentucky is the soul of racing, a place known for fast horses and good bourbon where the business with which the very state in synonymous should rate highly on the political agenda, where good sense would prevail. Is Kentucky not to be a place in which the welfare of the racing business, upon which the breeding is dependent, would be a priority after hoops with most politicians? Would it be unreasonable to assume that a few slot machines might stem the northward traffic flow toward Indiana-moored riverboat casinos? Not so fast.
The owner of Ellis Park said last week that his track would stand dark in 2010 unless alternative gaming is legalized. Ron Geary forecast the demise of Kentucky racing, which is faced with competition from casino gaming in Indiana and said that in the current climate he will be forced to shorten the meeting at Ellis this year and stage no racing in 2010.
If Kentucky is the soul of racing, New York the nation's Grade I capital is its heart. One clogged by political cholesterol.
Like many states, New York is broke but leaves plenty of money on the table.
Eight years after approval of video lottery terminals at the state's racetracks, Aqueduct, where more than 4,500 machines are authorized, has not yet installed a neon tube and there is no hope of progress in the foreseeable future.
The New York Racing Association, not a year removed from bankruptcy after having been bailed out by the state in return for the real estate beneath its three tracks, has a future predicated upon the development of a VLT business at Aqueduct. Like AIG, General Motors and other large, monolithic businesses, it may need additional funding from an unresponsive government.
Delaware North, a Buffalo-based firm that operates Finger Lakes Racetrack and the VLT casino at the Saratoga harness track that won the bid to operate the Aqueduct gaming facility, backed out this week while unable to meet the deadline for a $370-million franchise fee. Delaware North said in the announcement that in the current credit climate it is unable to secure loans sufficient to move forward with the project. A spokesman for David Paterson, the stand-in governor for the elected then disgraced Eliot Spitzer, said the process could be resumed at square one. The questions of when and how fast were left unaddressed. Paterson, whose visionary capacity is in question, has proposed such Solomonic solutions as the taxation of fully sugared soda, cigarettes and other staples while he leaves a million dollars a day in revenue from Aqueduct un-harvested.
"Nearly eight years ago, state government approved legislation that would allow video gaming at Aqueduct with the appreciation that it would generate a million dollars a day for the state treasury," New York Thoroughbred Breeders' Association executive director Jeffrey Cannizzo said in a statement. "During the eight years of protracted negotiation, New York taxpayers have lost more than $2.5 billion dollars in potential revenue."
Again, poof!
"Now," the statement continued, "with Wall Street in meltdown, sales tax revenue at historic lows, and a state deficit of staggering proportions, the continued delay in installing VLT is unfathomable. At a time when every decision to cut, slash, and reduce state government (not to mention health care) is creating harsh debate and recrimination, this opportunity to create a million dollars a day in state revenue should be at the top of Albany's agenda."
If Albany only had an apparent agenda.
No sport and few gaming businesses are as dependent upon responsive government as is racing. The week's developments involving the largest operator of racetracks in America, the most important and the still others in a state that is synonymous the world over with the word thoroughbred suggest strongly that governments are doing little to support businesses important locally, nationally and internationally but so pitifully wanting for political clout.
Stimulus amounts only to removing barriers that hamstring intra-dependent racing interests, block the beneficial implementation of proven revenue producers and facilitate competition with more enlightened nearby jurisdictions. But in the halls of government, solving a no-brainer may simply be asking too much.
Paul Moran is a two-time winner of the Media Eclipse Award, and has received various honors from the National Association of Newspaper Editors, Society of Silurians, Long Island Press Club and Long Island Veterinary Medical Association. He has also been given the Red Smith Award for his coverage of the Kentucky Derby. Paul maintains paulmoranattheraces.blogspot.com and can be contacted at paulmoran47@hotmail.com.